01—Abstract
Summary
Summary of the 10-K filed November 18, 2011. Cited figures are marked; the original filing is the authoritative source.
Starbucks Corporation's 2011 10-K report highlights a year of robust growth and improved profitability, driven by strong performance in its company-operated stores, particularly in the United States, and continued international expansion.
The company demonstrated resilience despite headwinds from rising commodity costs, effectively leveraging increased sales and optimizing store-level economics to drive an 8% increase in global comparable store sales. This growth translated into higher operating income and a significant improvement in earnings per share (EPS) to $1.62a. Key strategic initiatives included refining store operations through technology upgrades, expanding the food warming program into new markets like China, and successfully transitioning its consumer packaged goods business to a direct distribution model.
The company also continued its disciplined approach to store growth, with a primary focus on international markets, while managing its capital effectively through share repurchases and dividend payments. Management expressed confidence in its business model and brand strength, setting a positive outlook for fiscal year 2012.
02—Key points
Key Highlights
- Consolidated net revenues increased by 9% to $11.7 billion, primarily driven by an 8% rise in global comparable store sales.
- Operating income grew to $1.7 billion, with operating margin expanding to 14.8% from 13.3% in the prior year, despite higher commodity costs.
- EPS rose to $1.62, up from $1.24 in the previous year, aided by improved sales leverage and certain one-time gains.
- Company-operated stores generated 82.3% of total net revenues, with the US segment accounting for the majority of sales.
- International net revenues increased by 15%, reflecting foreign currency translation benefits and a 5% rise in comparable store sales.
- The company successfully transitioned its consumer packaged goods (CPG) distribution to a direct model, contributing to a 22% revenue increase in that segment.
- Starbucks returned approximately $945 million to shareholders through share repurchases and dividends in fiscal 2011.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2011, Starbucks Corp kept $0.11.
- Revenue$11.70B100.0%
- Cost of revenue−$4.92B42.0%
- Gross profit$6.78B58.0%
- Operating costs−$5.06B43.2%
- Operating income$1.73B14.8%
- Interest, other & tax−$482.8M4.1%
- Net income$1.25B10.6%
Where FY2011 revenue went
$11.70B- Operating costs: $5.06B, 43% of revenue
- Cost of revenue: $4.92B, 42% of revenue
- Net income: $1.25B, 11% of revenue
- Interest, other & tax: $482.8M, 4.1% of revenue
Kept 11% as net incomeNet income $1.25B · 11%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2011filed November 18, 2011Financial Statements
FY2011 against FY2010
| Line item | FY2011FY2010 | Change |
|---|---|---|
| Revenue | $11.70B$10.71B | +9.3% |
| Cost of Revenue | $4.92B$4.42B | +11.3% |
| Gross Profit | $6.78B$6.29B | +7.9% |
| Operating Expenses | $10.18B$9.44B | +7.8% |
| Operating Income | $1.73B$1.42B | +21.8% |
| Interest Expense | $33.30M$32.70M | +1.8% |
| Net Income | $1.25B$945.60M | +31.7% |
| EPS (Basic) | $0.83$0.64 | +30.7% |
| EPS (Diluted) | $0.81$0.62 | +30.6% |
| Shares Outstanding (Basic) | 1.50B1.49B | +0.5% |
| Shares Outstanding (Diluted) | 1.54B1.53B | +0.7% |
05—Questions
Frequently Asked Questions
What was Starbucks' overall financial performance in fiscal year 2011?
Starbucks reported strong financial performance in fiscal year 2011, with a 9% increase in consolidated net revenues to $11.7 billion. This growth was driven by an 8% increase in global comparable store sales. Operating income increased to $1.7 billion, and earnings per share (EPS) rose to $1.62, reflecting improved sales leverage and operational efficiencies despite higher commodity costs.
How did the US and International segments perform?
The US segment, which represents the largest portion of revenue (69%), saw a 6% increase in total net revenues, primarily due to an 8% rise in comparable store sales. The International segment, contributing 22% of total net revenues, experienced a 15% revenue increase, boosted by favorable foreign currency translation and a 5% rise in comparable store sales.
What were the key strategic initiatives undertaken by Starbucks during fiscal year 2011?
Key strategic initiatives included refining store operations through technology upgrades, expanding the food warming program into markets like China, successfully transitioning the consumer packaged goods (CPG) business to a direct distribution model, and continuing disciplined global store expansion, with a focus on international markets. The company also returned capital to shareholders through share repurchases and dividends.
What is the company's outlook for fiscal year 2012?
For fiscal year 2012, Starbucks anticipated moderate revenue growth, driven by mid-single-digit comparable store sales growth, new store openings, and strong performance in the CPG business. The company also projected modest improvements in consolidated operating margin and EPS, while planning for increased capital expenditures related to store renovations and manufacturing capacity.
06—Continue